356 mini/micro hydropower plants in KP: AGP detects flaws that led to failure in achieving project’s objectives

PESHAWAR: The Auditor General of Pakistan (AGP) has pinpointed shortcomings that led to failure to achieve objectives of a project involving hundreds of mini/ micro hydropower plants set up in Khyber Pakhtunkhwa, the audit report on accounts of the provincial government for audit year 2019-20 has revealed.

The report has already been presented in the provincial assembly and its speaker has referred it to the Public Accounts Committee of the house.

During audit of the Pakhtunkhwa Energy Development Organisation (PEDO) for the financial year 2017-18, it was observed that 356 Mini/ Micro Hydropower Plants (HPP) in northern districts of KP were launched in the year 2014-15 with a total PC-1 of Rs5250.19 million for a period of three years.

According to the PC-1, the main objective of the project was to develop cheap hydropower potential and to provide electricity on a reliable basis to local areas, especially those which were deprived of power.

The project was aimed to provide adequate facilities for the generation and transmission of electrical energy, keeping in view the severe power shortage at the time and further requirements for industrial, agricultural and economic development of the country.

The audit report observed that the project was launched without conducting a proper feasibility study, as required under the rules, which resulted in the revision of the PC-1 as many as four times.

No detailed concept paper highlighting different aspects of the project was prepared and out of the 356 HPPs, 24 sites were removed from the list due to faulty identification of sites. The stance of the audit team was further strengthened as seven of the developed schemes were flooded before testing and commissioning, due to unfeasibility of sites.

According to the report, the consultant reported in their progress report for June 2018 that 252 projects were completed in 2016-17 and 2017-18. However, testing of the completed projects as required under the agreement was not carried out due to reasons unknown to the audit team.

Physical verification of three sites each in Swat, Shangla and Upper Dir districts revealed that generation of electricity had begun but record of revenue collection had not been maintained, as per requirement of the PC-1. Furthermore, no check and balance over the community operating the HPPs was observed.

The audit team further observed that no proper training for operating the HPPs was provided to the community in question; thus, the capacity of the scheme was not fully utilised as the facility of electricity was given to a limited number of houses.

Physical verification of the site at Bulkarai and Kuz Parao in Swat district revealed that self-engineering was carried out by installing a water miller on the water channel to be used by the power house. In response to a query by the audit team, the operator said the power house was operationalised at night and during daytime the water channel was used for the water miller.

The audit team further pointed out that the schemes were awarded in bulk to NGOs for construction, and the NGOs further sublet work. The same was not properly managed and completed due to the limited capacity of the organisations. The stance of the audit team was verified from the fact that project management had deducted Rs10 million from the payment bills due to below-par specifications.

Similarly, physical verification of site of Naway Kalay Shapur 75 KWH HPP in Shangla district revealed that no Electronic Load Controller was installed there, which was the main equipment and its absence could have caused damage to the turbine, runner and bearing, etc.

The last shortcoming identified by the audit team was that a project worth Rs5250 million was not properly managed as the activities were managed on an additional charge basis, with no permanent project director being appointed.

The audit team attributed occurrence of lapses to ill-planning and weak internal controls and when this was pointed out in April 2019, the department concerned stated that a detailed reply would be furnished later on.

The audit personnel also requested the department for holding Departmental Audit Committee (DAC) meeting twice. However, no DAC meeting was convened till finalisation of the report.

The audit personnel have recommended an investigation into the matter and fixing of responsibility against person(s) at fault.

In another case, the audit team also detected wasteful expenditure of Rs91.979 million on account of Operation and Maintenance (O&M) of the Ranolia Hydropower Project.

During audit of PEDO for the financial year 2017-18, it was observed that the contract agreement of O&M for the Ranolia Hydropower Project was executed with M/S Comtech Islamabad in 2014 for five years with a total cost of Rs 251,402,025 against which the local office paid an amount of Rs91,979,345 up to the financial year 2017-18.

Further verification of record revealed that no proper purchase and sale agreement of power generation was carried out with the Peshawar Electric Supply Company (PESCO) and there were no O&M activities. The contractor was receiving money according to the agreement while performing no O&M activities.

The audit staff held that executing the O&M contract with the contractor and paying him the said amount at the time when there was no contract agreement with the distribution agency, i.e. PESCO, was a burden on the resources of PEDO without getting any utility. The audit staff attributed occurrence of the lapse to non-adherence to the spirit of financial propriety.

When this was pointed out in April 2019, the department stated that the O&M contractor was mobilised to the project site before commissioning of the power plant to witness the pre-commissioning activities initiated by the EPC contractor. Initially, the project completion was scheduled by December 2014, but later on extended to June 2015. Because of the expected commercial operation date, i.e. April 2015, the O&M agreement was signed with the contractor.

The interconnection with the national grid was delayed due to the transmission line issue with NTDC, which took considerable time due to status-quo granted by the courts to land owners against the construction of the transmission line.

The audit staff requested the department for holding DAC meeting twice. However, no DAC meeting was convened till finalisation of this report. Audit has recommended an investigation into the matter and fixing of responsibility against the person(s) at fault.

Copyright Business Recorder, 2022